What do you get when you combine the expertise of an institutional equities analyst with the latest in Apple iOS technology? The answer is something called Chaikin Analytics for iPad, which claims to be the most powerful mobile analytics workstation for money managers. While I cannot confirm the claim, I can attest that Chaikin Analytics for iPad is a mobile analytics tool that many advisors will find attractive.
Veteran investor Marc Chaikin is the driving force behind the product, which works equally well on an iPad and iPad Mini. Chaikin, who has 40 years of experience, is known to technical analysts as the creator of the Chaikin Oscillator, an indicator designed to measure the momentum behind buying and selling pressure. Chaikin claims this and another indicator, the Chaikin Money Flow Technical Indicator, are the basis for Investor's Business Daily's Accumulation-Distribution Rating.
The genesis of Chaikin Analytics for iPad was Chaikin's free iPhone app, which he released in 2011. The goal was to produce an easily understood, easy-to-use app with professional-grade tools for individual investors. Chaikin created a well-designed iPhone app based on 20 indicators that institutions use to evaluate equities.
Chaikin expected the app to garner a following among younger investors, but he discovered that it appealed primarily to people age 55 to 70. He also noticed that there was interest in his app among high-net-worth individuals and some advisors, asset managers and other financial professionals. He then set out to create a more powerful tool for financial professionals on the iPad platform.
HOW IT WORKS
At the core of the Chaikin Analytics for iPad app is the Chaikin Power Gauge Rating. This is derived from both fundamental and technical indicators and is designed to be a single composite indicator of how bullish or bearish to be on a given stock at any given time. This ranking is based on 20 factors that fall into four major categories: financial metrics, earnings performance, price/volume activity and expert opinions. Rankings are updated each weeknight for about 5,000 equities.
The financial metrics include such factors as the long-term debt-to-equity ratio, price-to-book value, return on equity, price-to-sales ratio and business value. Earnings performance includes such factors as earnings growth, earnings surprises and earnings consistency. Expert opinion covers revisions to earnings estimates, short interest, insider activity, analyst opinions and relative strength versus the industry.
Subscribers to the iPad app can view not only the composite Power Gauge rating, but also the relative strength of the four major components to get a better idea of what factors are driving the rating. (You cannot see how the 20 individual factors are weighted; that's considered proprietary.)
Once you understand the basics of the system, you can use the tool in a number of ways. The app comes preloaded with a number of lists, including several proprietary compilations, such as Large Cap Bulls, Dividend Champs, Warren Buffett Picks and Facebook Most Liked. These are designed to give you ideas of how you can use the system creatively.
If you want to add stocks that mirror those Buffett invests in, for instance, you can look at a list of approximately 40 stocks on Chaikin's Buffett list and then start your research with 10 that currently have bullish ratings from Chaikin. If you are looking for a stock in the banking sector, you might want to avoid the bank on the list ranked as bearish and instead investigate the two bullish picks.
Another approach might be to browse the list of industries ranked by strength. If you like a sector rotation strategy, this list can point you toward some good candidates. One recent day, the strongest sector - the one with the highest ratio of bullish to bearish stocks in it - was Containers and Glass, so that would have been a good sector to mine for invest- ment candidates.
Next to every industry name on the list is a little heat map, which shows the number of bullish (green), hold (yellow) and bearish (red) signals for each stock within the group. When the list is opened, you see all the stocks with ranking, symbol, name, price, technical indicator summary and recommendation, if any. If there is a recommendation, the basis (relative strength buy, money flow buy, etc.) of the recommendation is displayed on a detail page containing Power Gauge rankings, fundamentals and a comprehensive chart. This report is generated in the landscape mode - but you can automatically generate a detailed four-page Power Gauge Report by simply flipping the iPad 90 degrees to portrait mode from landscape. These reports contain text and graphics with a well-designed summary of key factors. Flip the iPad back to the horizontal view, and the previous view appears.
The application also includes a list of a few popular indexes (Dow30, S&P 500, Nasdaq 100, OEX 100). A glance at any list can give you a feel for the breadth of the overall market because you can see how many stocks in each list have a bullish, bearish or neutral rating. Unfortunately, you can't always get an accurate feel for an index because the ones represented are weighted, and you can't filter by such factors as price or capitalization. So, for example, if you owned an equal-weighted S&P 500 ETF, looking at the gross number of bullish versus bearish stocks might be more relevant, but with a weighted index such as the S&P 500, not so much.
The Chaikin Analytics for iPad app would clearly be valuable for advisors who take an active approach to asset allocation, provided you buy into the Chaikin methodology. It really does pack a lot of data and analytical power into a very small package.
Advisors can create their own watch lists and identify which stocks on the lists are timely purchases. More important, you can monitor the equities in existing portfolios in the hopes of identifying potential losers before they become a major drag on performance. You can use the various prepopulated lists that Chaikin supplies to mine for investment opportunities, and you can create about 500 lists of your own in search of additional ideas.
If a client or prospect calls you with a question about an individual stock, you should be able to have an intelligent conversation about the factors influencing the company's shares after reviewing the rating and glancing at the chart. If more information is necessary, a full review of the four-page PDF report should provide it. (Unfortunately, however, there is no easy way to do anything with the PDF report other than read it within the application. It would be nice if you could easily print it, email it or port it to another application.)
The app is available by subscription for an annual fee of $1,950, or $195 by the month. This covers a weekly e-newsletter with an analysis of the market as well as recommendations and a Portfolio Health Check - a weekly analysis of portfolios you maintain on the system. The latter offers some useful metrics, including how your portfolio fared versus all of the portfolios being tracked within the Chaikin community. It also tells you how many of your holdings have a bullish ranking versus how many have a bearish ranking, and alerts you to stocks whose rankings have changed up or down in the recent week.
In addition, it suggests trades you may want to consider. If, for example, Chaikin is generally bullish on an industry group, but you own an equity within the group with a bearish rating, the app will suggest that you may want to swap out the weaker stock in favor of one with a better recommendation.
Clearly, the more active an approach you take to investing your clients' assets, the more value the Chaikin Analytics for iPad app will provide. But even if you are not generally active in the markets, the app could be worth your while. For example, if prospects come to you with individual securities, you can impress them with your knowledge of their holdings. Also, if you outsource portfolio management to a third party, you can track the portfolios with this tool to identify potentially risky holdings that you might want to discuss with a portfolio manager.
APPLE TABLETS ONLY
Potential buyers, take note: This app is iPad only. Financial Planning's latest Technology Survey indicates that roughly 50% of advisors own tablets, and of those about 80% own an iPad. That means 60% of those who took part in our survey would not have use for such an app at this time.
There are a great many good analytical tools on the market today, and some can be accessed through mobile devices, but few have been designed specifically for the iPad. If you are in the market for such a tool, Chaikin Analytics for iPad deserves a look.
Joel Bruckenstein, a Financial Planning columnist, is co-creator of the Technology Toolsfor Today newsletter, conference series and technology guides for advisors, including the new Technology Tools for Today's High-Margin Practice. For more information, visit JoelBruckenstein.com.